and now white is a pawn up, zero pieces/pawns hanging, and threat of Nf7 is now very real for black.

this opening seems like a one-trick trap (hoping for 5.Nxf7). i think black has big problems with decent play from white. or am i missing something? is black ok in my line above? i dont see any compensation for black's pawn and bad king, but i've not studied this opening. just wondering. cheers.

You are absolutely right in that is the better way to play it. However in most case white thinks he can win great material a rook instead of a queen by the Knight fork. Traxler theory agrees with you. The bishop is a fairly even game. see some past comments in my recent blogs were I posted some chessgames links.

About Me

There exists an extremely large group of chess players who are no longer beginners nor, on the other hand, masters or point hunters, but players who aim primarily at deriving an aesthetic satisfaction from the game. For such players an attacking game is more attractive than positional technique and they will continue to attack regardless of risk., for their stormy contest are not going to be noted down in theoretical textbooks.
From the introduction to Art of Attack in Chess :Vukovic